The Reserve Bank of Australia has made its final cash rate announcement for this financial year.
In a decision which is unlikely to surprise commentators, experts or investors – the RBA has decided to leave the cash rate unchanged at 2.00 per cent.
The decision was widely predicted, given that the central bank reduced the cash rate in February (to 2.25 per cent) and again in May.
A finder.com.au survey of 34 economists and commentators found they were unanimous in believing the cash rate would remain on hold today.
LJ Hooker CEO Grant Harrod said the RBA’s decision to wait for May’s rate cut to fully take effect was sensible, despite weak business investment figures.
“We haven’t seen any signs, but it is too early to call if it’s had any positive effect in cities such as Perth and Canberra – it could take another three to six months,” he said.
Mr Harrod said a rate cut was now more likely at the end of the year.
Today’s announcement, he said, will enable the Sydney property market to keep performing without venturing into ‘bubble’ territory.
He said a lack of listings, combined with the historic low rates, is continuing to bring record numbers of people to open inspections and push up prices in Australia’s most populous city – but that a lag in DA approvals largely protected it from a property bubble.
Mr Harrod said that while rate cuts may be welcome news for home owners and investors, there are problems with the property sector being used to stimulate the post-mining boom economy.
“We are at historic record lows and if businesses aren’t out there investing, it is not because rates are not low – it is because of confidence, and that comes back to the federal government.
“They need to build infrastructure and policies that will show businesses there will be economic growth, so they will go out and invest.
“Infrastructure is also good for the property market. We are seeing this in Sydney with demand for housing along the North West Rail Link.”
Mr Harrod said today’s cut is likely to bring even more buyers to the market, but warned there will be a catch 22 situation between buyers and sellers.
“The adage ‘don’t buy until you have sold’ – which is how the world used to work – has changed to ‘don’t sell until you have bought’, and that is affecting the market,” he said.
In addition, Mr Harrod said winter could offer the “best time” for home owners to sell before they are inundated with competition in spring.